Choosing the right insurer for agricultural aircraft

Agriculture

Choosing the right insurer for agricultural aircraft

Published: 10 July 2015

With nearly 400 airplanes and helicopters landing at the recent NAMPO agricultural trade show over a period of four days it has become critical that the farming community obtain adequate and appropriate insurance from a well-established insurer with an excellent track record, credit rating and claims- paying history.

Santam has been in the insurance business for 97 years, and its aviation business is currently the biggest in Africa. “Our insurance products are supported by bespoke underwriting criteria to manage and quantify our clients’ farming and recreational risks. An aircraft is a very expensive asset – surely nobody would take a chance by insuring it with a company without a long-standing and proven history?” says Sylvanus Retief, Santam Aviation.

According to Sylvanus, farmers own or operate aircraft ranging from single- engine piston aircraft such a Cessna 182 to twin engine aircraft. “Many farmers own helicopters such a Robinson R44, while others have the more expensive turbine helicopters like Bell 407 or Robinson R66. We also have farmers owning or operating agricultural aircraft for aerial applications such as crop spraying. We cater for a wide spectrum of farmers because we believe that each risk is different and needs to be treated as such,” says Sylvanus.

Gerhard Diedericks head: Santam Agri, says some of the main areas of concern for famers are crop-spraying, game work and underinsurance.

“The farmer will need to insure his crop-spraying aircraft for accidental damage to the aircraft itself, malicious damage and liability to third parties should engine failure occur and the aircraft is forced to land on his neighbour’s farm damaging property in the process. Another risk arises when helicopters involved in game operations such as game capture, culling, counting, herding, darting and viewing.

Due to the depreciation of the rand, it is important to ensure that the aircraft is insured for its correct value. In the event of a total loss, the payment proceeds might not be enough for the farmer to buy a similar aircraft. In some cases, an aircraft that is repairable is written off due the inadequacy of the agreed value.”

Santam Aviation is able to assist the farmers by offering the following covers.

  • Hull All Risks – cover for loss or damage to the aircraft on the ground, in flight or whilst taxiing.
  • Hull War Risks – malicious damage, war, riot and strikes and related perils.
  • Liability (Third Party excluding Passengers) – legal liability to third parties.
  • Liability (Third Parties and Passengers on a Combined Single Limit basis) – some farmers fly guests to and from their safari lodges and there is need to ensure that adequate cover for passenger liability is in place.
  • Breach of Warranty – the banks insist on this cover if they have financed the aircraft, usually restricted to 90% of the agreed value of the aircraft.
  • Excess Buy-down – the excess, which can be quite substantial for example 10% of the value of the aircraft/helicopter, can be insured down.
  • Pilot Excess
  • Remotely Piloted Aircraft System (popularly known as Drones) – as of 1 July 2015 we will offer cover for drones.

The role of specialist intermediaries

Buying insurance and getting the right level of cover is a complex process and requires the expertise of specialist intermediaries. “The role of insurance intermediaries is vital in the aviation industry as they are best placed to advise clients given their unique understanding of the sector. They can advise what an aircraft may or may not be covered for, and when a breach of regulations may lead to a repudiation of a claim. For example, one of Santam’s clients contacted their specialist intermediary recently to find out whether their aircraft would be covered in a certain situation – they were game darting and had run out of light and the intermediary could provide the necessary expert advice to enable them to make an informed decision.”

At Santam, we want to give our aviation sector clients the peace of mind that is critical to enjoying an exhilarating experience. This boils down to effective risk management, which includes assisting our clients to be better equipped to manage their own risk effectively. In short, providing insurance good and proper,” Sylvanus concludes.